Athletics Veritas is a weekly series aimed at helping higher education executives, faculty, and other stakeholders stay tuned in on trending national issues impacting college athletics, especially NCAA Division I. Athletics Veritas is created by senior DI athletic administrators around the nation.
Part II of AV’s Q&A with the CCHA Collegiate Sports Law Practice to Discuss the Name-Image-Likeness (NIL) Frontier
Reactions to the NCAA’s pivot to delay voting on the NIL proposals
Areas of the NIL proposals that the NCAA may amend further
Whether NCAA NIL policy changes will have significant impact on high school athletes
How institutions can avoid NCAA violations stemming from NIL used as a recruiting inducement
Educating student-athletes about professional services and potential legal liability for institutions referring student-athletes to specific services
Based in Indianapolis, the CCHA Collegiate Sports Law Practice specializes in assisting NCAA member universities across the country with NCAA compliance and risk management, infractions representation, student-athlete eligibility matters, Title IX matters, education on NCAA compliance, contract drafting and review, and education and planning for NIL. To sign up for CCHA’s free quarterly NCAA Case Reviews, please click here.
For full topical value and contextual relevance, it may be beneficial to first review Part I of this series. To do so, please click here.
The following Q&A is for informational purposes and should not be construed as legal advice.
Part II
AV: The NIL news cycle continues to spin. Since Part I of our Q&A ran two weeks ago, the NCAA opted to delay votes on the NIL proposals in light of the Justice Department’s letter to the NCAA. As congressional and government officials continue expressing strong views on the direction of NIL policies, what areas of the NCAA’s NIL proposals do you anticipate most likely being amended and why?
CCHA: From the coverage of the Justice Department’s letter and the NCAA’s responses, it seems that the Justice Department was attempting to encourage the NCAA to broaden the NIL legislation (and transfer legislation) beyond what’s been proposed. The Justice Department also stated that any antitrust exemption that the NCAA were to garner legislatively would be interpreted on the narrowest grounds. With this warning, the NCAA may look to remove some of the restrictions or guardrails on the legislation, including potentially re-examining the conflict with institutional sponsor issue or some of the other guardrails that may be considered to be more anti-competitive. However, personnel turnover will occur with the new Biden administration. Although the prior Assistant Attorney General of the Justice Department who authored the letter commented publicly that he believes his successor will take a similar path, that is yet to be seen. Perhaps more critically, the timing and willingness to get involved in this issue during Biden’s first 100 days is uncertain and with at least one state law going into effect as soon as July 1, 2021 in Florida, the NCAA will need to act sooner rather than later. Also relevant to timing is the upcoming Supreme Court oral argument in the Alston case in March. We think it’s unlikely we see any NIL legislation passed before that argument.
AV: What are CCHA’s thoughts on the federal bill sponsored by Sen Wicker (R – Mississippi) and the student-athlete’s rights bill that included NIL provisions co-sponsored by Sen Booker (D – New Jersey) and Sen Blumenthal (D – Conn)? What should institutions be doing to best navigate a layered legislative landscape of federal and state NIL bills along with the NCAA’s NIL proposal?
CCHA: Navigating all of the legislative proposals on a federal, state, and NCAA level will be highly challenging, especially for institutions in those states that passed NIL legislation with looming effective dates and that gives student-athletes greater rights than proposed NCAA legislation. These challenges are precisely why the NCAA is seeking preemption at a federal level. Even on the federal level, though, we see a wide variety of proposed legislation -- everything from Rep. Anthony Gonzalez’s (R-OH) and Rep. Cleaver’s (D-MO) proposed bill, which is much more aligned with the NCAA’s goals, to Sen. Booker’s (D-NJ) proposed Student-Athlete Bill of Rights, which addresses issues in collegiate sports well beyond NIL. Given the transition to a new administration and the federal government’s focus on COVID-19, it could be unlikely that a federal law will be enacted in a timely manner. On the other hand, Democrats now have an edge in both the House and the Senate. Traditionally, the Democratic party has focused its efforts on promoting legislation to protect the “labor” from the “employer,” which may lead to legislation that provides greater rights and protections to student-athletes with less protections to institutions. This broader legislation is much more possible than it was prior to January. Senator Booker has made comments recently indicating he thinks some of this broader legislation can be passed. At some point, the NCAA will ultimately have to address how competitions with schools in states with conflicting legislation and those schools’ participation in NCAA tournaments will be affected by such legislation. The NCAA will likely pursue legal remedies to try to deem such state laws as unconstitutional rendering them temporarily invalid, and eventually permanently invalid. Until there is any clarity, though, institutions should prepare to comply with both state laws and NCAA rules. If that is not possible, institutions will need to assess the risk of non-compliance with either or both to determine the best course of action.
AV: Noting the assortment of NIL bills that have been adopted in states including California, Nebraska, Florida, and Colorado, if the NCAA is not able to pursue legal remedies such as an injunction against state bills that do not align with the NCAA’s current eligibility rules and proposed NIL rules, is it conceivable that Division I student-athletes in those states will be able to exploit the more permissive state laws, at least temporarily, to pursue opportunities in the NIL space before the NCAA ‘s NIL proposal goes into effect? Or, regardless of the NCAA’s legal remedies to halt or declare invalid any state NIL law in the foreseeable future, could the NCAA simply enforce its current eligibility rules that could result in declaring ineligible student-athletes who reside in these states who were compensated for their NIL as permitted under state NIL laws, but violate current NCAA rules?
CCHA: You have squarely identified the complexities of these situations. Student-athletes will not know whether they need to comply with state law, NCAA rules, or both—and the impact of not adhering to one or the other. Similarly, institutions will not have those answers either. Specific to the student-athlete situation you described above, if state legislation in those states is written to prohibit universities from disallowing student-athletes to benefit from their NIL, then student-athletes may still be able to follow NCAA rules and maintain eligibility by adhering to the more restrictive NCAA rules. Just because a state law allows something does not mean the student-athlete has to take that opportunity. On the other hand, universities will not be able to declare a student-athlete ineligible that does take such an opportunity—so it is really the universities, in most cases, in a more legally tenuous position. You can see a lot of angles for litigation to exist here. But litigation is typically lengthy and would not provide immediate answers to these questions that could arise. If schools are left in this uncertain environment, they would need to consider the penalty or consequences from not adhering to either the state law or the NCAA rule and what legal exposure they have—can the state bring litigation to enforce the law? Will a student-athlete have a private right of action? At this point, there are too many states with legislation that could conflict with NCAA rules, even if NIL legislation is adopted, that the NCAA will be forced to address these issues. Otherwise, it could be left with schools across the country operating under different rules in contrast to the even playing field that the NCAA tries to uphold.
AV: As universities try to educate their student-athletes on the NIL environment, what should universities be considering when highlighting or featuring professional services (e.g., tax, law, branding) to assist and educate their athletes? Do universities potentially create legal liability by featuring or casually referring student-athletes to professional services that are then retained by student-athletes?
CCHA: Like we mentioned in Part I, this is another area where universities will be walking a fine line between educating and supporting student-athletes and promoting professional service providers. The exculpatory waiver discussed in Part I may provide some protection here. However, universities may seek to have exclusive agreements with certain providers that prohibits dual representation of an institution and student-athlete, or possibly even a coach and student-athlete. Alternatively, the institution could provide a wide variety of vetted providers to student-athletes, and if any are featured, make it clear that the institution is not endorsing such an individual. It will be key for institutions to properly educate coaches and parents and guardians on this issue. Student-athletes will likely turn to those individuals they trust to help them make these decisions. If a coach has a relationship with a specific professional service provider, he or she will need to be careful to avoid too heavily promoting that person or company to student-athletes. Communication and disclosure among the coaches, parents, student-athletes, and administrative staff will be key to this balancing act.
Regarding areas of emphasis on education, NIL presents a unique opportunity to provide training on life skills that student-athletes will need even outside of NIL. Student-athletes can start to understand what a contract is, why it has legal power, what signing one means, how to manage finances, what it means to pay taxes, how to legally start a business, how to operate a business, and how to surround themselves with the right individuals. Whether a student-athlete becomes a professional or graduates and enters the workforce, he or she will use these skills as they grow into adults and in their occupations. Institutions should consider what resources already exist on campus (e.g. business schools, tax and legal clinics) that they can leverage. Forging these cross-campus relationships may deepen connections between the academic units and athletics programs and benefit all involved.
AV: What role will institutions play with prospective student-athletes in relation to NIL activities?
CCHA: Many state high school athletic associations may still prevent high school students from NIL activities, but those associations may change their rules as the NCAA rules and federal and state laws change. However, just before the NCAA Convention, the National High School Athletic Association published a strong statement against high school students being able to profit from their NIL. To the extent high school associations become more permissive, compliance will play an even more critical role in recruiting. Compliance should provide education to prospective student-athletes. Specifically, compliance should speak with or provide educational materials to any student-athlete that makes an official visit, (or makes a virtual visits), especially when the institution has or plans to make that student-athlete a scholarship offer. Financial aid documentation will likely need to begin to incorporate certain disclosures and representations regarding pre-collegiate enrollment NIL activity. The NCAA’s NIL proposal may, once adopted, include certain required actions on the institution's part to educate prospects on NIL policies during the recruiting process and prior to the prospect signing a scholarship. If amateurism rules do not change at the high school level, the potential for there to be bad actors within the recruiting process could increase if a market develops for high schoolers to forgo playing for their high school team and only participate in a club setting, which is less regulated and less focused on protecting high schoolers. Additional due diligence in that regard may fall on compliance’s shoulders when determining the eligibility of prospects.
AV: How are institutions supposed to ensure that NIL is not used as a recruiting inducement?
CCHA: This is likely to be one of the most difficult aspects of NIL to administer and monitor for compliance offices. Arguably, every public announcement of a school partnering with a branding or marketing company is done to make it known to recruits that the institution will provide NIL support to student-athletes. Further, it will be difficult to determine whether an NIL deal with a local booster and a prospective student-athlete is a recruiting inducement, or not. Institutions must be diligent and consistent in their reviews of these deals, including ensuring a fair market rate, understanding how the deal originated and what conversations were had between the prospect and the vendor or individual. Institutions must also be diligent in their education of these individuals and entities while being sensitive to their existing relationship with those individuals as donors and supporters of the programs. These transactions, though, could greatly affect a prospect’s eligibility at an institution so they should be carefully monitored.
AV: Thank you to the CCHA team for highlighting several important considerations impacting the evolving NIL marketplace in relation to NCAA rules, and the college athletics landscape.
CCHA: Thanks for all of the good questions. Between potential NCAA legislation, federal and state legislation, and the Alston case, NIL should be top of mind for any institution. We appreciate the opportunity to discuss these issues with AV!
For more information about the CCHA Collegiate Sports Law Practice group and the array of services it provides universities, please click here.
Athletics Veritas is presented for information purposes only and should not be considered advice or counsel on NCAA compliance matters. For guidance on NCAA rules and processes, always consult your university’s athletics compliance office, conference office, and/or the NCAA.
